Karnataka government’s steeply hiked prices has dipped the sales of Indian Made Liquor and beer by 60 per cent on first three days of reopening of retail shops.
On May 6, the sales were peaking at Rs 232 crore, but fell to Rs 61 crore on May 20.
The increased ad valorem rates by 21 per cent to 31 per cent, on May 6, resulted in retail prices climbing up from Rs 50 to Rs 1,000 per bottle, depending on the brand. Beer was spared the hike.
Karnataka had increased ad valorem rates to fill its coffers, which were not ringing during Covid lockdown.
As much as 38 lakh litres of IML were sold on May 6, but, on May 20, only 25 lakh litres were sold. “The Additional Excise Duty on IML was hiked for raking in huge revenue, but the decision has fell flat,” liquor shop owners said.
This also resulted in Karnataka missing the monthly average revenue target of Rs 1,900 crore. It feel short of the target by at least Rs 400 crore in May, though pubs, clubs, bars and restaurants, were allowed to clear old stock.
The fall in sales has badly impacted tax revenue.
From May 4 to May 20, the collection was Rs 900 crore. The excise department officials said they expect about Rs 500 crore by May 31.
Tax hike may have huge impact in long term, Karnataka Brewers and Distillers Association President Arun Kumar Parasa said.
K S Shivaiah, excise joint director (statistics), said of the 10,050 liquor outlets in the state, only 4,880 shops are currently open. Another major reason is large-scale return of migrants.